To start, let's look at the different terms from these reports and explain what they mean and how they're calculated.

Active Subscriptions

An active subscription is one that is 'active' at the time. By default, this is a subscription with either the
active status or the pending cancel status. If you consider subscriptions that are pending cancellation as churned (not active), you can change this in the store subscription settings here.

When Metorik gives you stats about active subscriptions over time, it needs to look back at the history of your store and try determine how many subscriptions were active on any given day.

In dong this, it attempts to find all the subscriptions that
had not churned at the time. This can be impacted by the previously mentioned subscription settings. Read the About Churned Subscriptions area below for more about this.

MRR - Monthly Recurring Revenue

MRR is calculated by looking at the active subscriptions (explained above) and figuring out the monthly value of each one. If the subscription has a
monthly billing period, this is pretty simple and we just take the recurring total when calculating MRR. If however it has a more complicated billing period, or perhaps renews every 2nd/3rd/4th/etc. billing period, we will do the math to calculate how much the subscription is worth on a monthly basis.

For example, a weekly subscription for $25 will be multiplied by 4.3 (weeks in a month), giving it an MRR of $25 x 4.3 = $107.5. If you had a monthly subscription for $100 that was charged every 2nd month, it would have an MRR of $100 / 2 = $50.

ARR is simply the MRR multiplied by 12 (months in a year).

Retention Rate

Metorik calculates your subscription retention rate by figuring out what % of the previous month's active subscriptions/MRR has been retained by the end of the next month. Let's look at an example of this.

There were 8 new subscriptions in February. Metorik will start by taking them off the number of active subscriptions at the end of February (24), because they were not retained from the previous month. So now Metorik can determine that there are 16 active subscriptions at the end of February from the original 20 active subscriptions at the end of January.

As such, the retention rate is equal to 16 / 20 =
80%.

Important to note: Subscriptions that churn in the same month they are started are currently not counted as a new subscription, as this could make your retention rate seem higher than it technically is. We may adjust this in the future.

Churn Rate

Churn is calculated using the simple approach of figuring out:

1. How many active subscriptions / MRR you had at the beginning of the month.

2. How many subscriptions
churned in that month.

We then divide
churn by active subscriptions. Let's look at an example:

February 2018 Start: Active Subscriptions - 20 | Churned - 5

So the churn rate is equal to 5/20 =
25%.

Important to note: Subscriptions that churn in the same month they are started are currently not counted as a churned subscription, as this could make your churn rate seem higher than it technically is. We may adjust this in the future. As such, churn rates can be inaccurate if you bill on a weekly schedule.

About Churned Subscriptions

The churn date varies based on your store's subscription settings. Basically, we currently calculate the churn date by looking at the time the 'subscription status last changed'. By default, we consider a subscription churned if the status is 'cancelled' or 'expired'.

If you have
enabled 'on hold to be considered churned' in the settings, we will also consider a subscription churned if the status is on-hold. By default, this is enabled.

If you have
disabled 'pending cancel is active' in the settings, we will consider a subscription churned if the status is pending-cancel. By default, this is enabled.

There is an issue though. If the subscription changes from pending cancel to cancelled, or from on-hold to cancelled, we will use the new cancelled date as the churn date. So this can create a bit of inconsistency and confusion. The issue is that we don't currently know the exact date a subscription changes to being 'on hold' or 'pending cancel', unless it is the current status, due to some technical limitations of WooCommerce Subscriptions.

In the future, they [WooCommerce Subscriptions] will be adding support for storing the 'on hold' date, and we will add a setting that lets you choose which date should be used for churn if multiple dates are possible - so you could set the churn date to be the earliest possible churn rate.

Currently, Metorik will use the 'latest' possible churn date.

I know this is pretty confusing, so try not to worry about it if it doesn't concern you, but keep it mind if it looks like the historical churn numbers are changing a bit.

Numbers seem off

If you ever feel that the numbers seem wrong, definitely check the store
subscription report settings. Also please feel free to reach out to us on the live chat to discuss the numbers.